 Prepared by: Denni G.

Borres

HOURS WORKED [ART. 84] shall include:

1. all time during which an employee is required to be on duty or to be at a prescribed workplace, and
2. all time during which an employee is suffered or permitted to work
*Rest periods of short duration during work hours shall be counted as hours worked.

PRINCIPLES IN DETERMINING HOURS WORKED

1. All hours worked which the employee is required to give to his employer,
regardless of whether or not such hours are spent in productive labor or involve
physical/mental exertion;

2. An employee need not leave the premises of the workplace in order that his rest
period shall not be counted, it being enough that he stops working, may rest
completely and may leave his workplace, to go elsewhere, whether w/in or
outside the premises of his workplace;

3. If the work performed was necessary, or it benefited the employer, or the

employee could not abandon his work at the end of his normal working hrs
because he had no replacement, all time spent for such work shall be considered
as hrs worked, if the work was w/in the knowledge of his employer/immediate
supervisor;

4. The time during which an employee is inactive by reason of interruptions in his

work beyond his control shall be considered time either if the imminence of the
resumption of work requires the employee’s presence at the place of work or if
the interval is too brief to be utilized effectively & gainfully in the employee’s own
interest.

PRE/POSTLIMINARY ACTIVITIES

Preliminary (before work) and

postliminary (after actual work)
activities are deemed performed during
working hours, where such activities
are controlled/required by the
employer and are pursued necessarily
& primarily for the benefit of the
employer.

WAITING TIME
➢ whether waiting time constitutes working time depends on the circumstances on each particular case;
  Prepared by: Denni G. Borres

➢ controlling factor is whether or not time spent in idleness is so spent predominantly for the employer’s benefit or for
the employees:
1. Engaged to Wait – waiting time spent by employee shall be considered as working time if waiting is
considered an integral part of his work or if the employee is required/engaged by an employer to wait
2. Waiting to Engage – idle time is not work time.

WORKING WHILE EATING

General Rule: Employee must be completely relieved from duty for the purpose of eating regular meals. The meal time is
not compensable if he is completely free from duties during his meal period even though he remains in the workplace.
Exception: Employee is not relieved if he is required to perform his duties whether active/inactive, while eating (ex.
Stand-by for emergency work/ an office employee who is required to eat at his desk/ a factory/worker who is required to
be at his machines is working while eating)

WORKING WHILE SLEEPING

General Rule: Sleeping time may be considered working time if it is subject to serious interruption or takes place under
conditions substantially less desirable than would be likely to exist at the employee’s home.
Exception: if there is an opportunity for comparatively uninterrupted sleep under fairly desirable conditions, even though
employee is required to remain on or near the employer’s premises and must hold himself in readiness for a call to action.
*Sleeping time allowed to an employee will depend upon the express or implied agreement of the parties. In the absence
of an agreement, it will depend upon the nature of the service and its relation to the working time.

ON CALL
➔ Although employee can rest completely and may not be actually at work, if they are required to be in their place of
work before/after the regular working hours and w/in the call of their employers, the time they stay in the place of
work should not be discounted from their working hours
➔ Employee cannot use the time effectively for his own purposes is working while on call.
➔ NOT ON CALL: Employee is not required to remain on the employer’s premises but is merely required to leave work
at his home or w/ company officials where he may be reached
➔ Public Health Workers’ on-call status refers to a condition when public health workers are called upon to respond
to urgent or immediate need for health/medical assistance or relief work during emergencies such that he/she cannot
devote the time for his/her own use. [Sec. 15, RA 7305]
➔ With cellphone or any contact device: if an employee is kept “within reach” through a cell phone, he is NOT on call.

TRAVEL TIME

time spent walking, riding, or traveling to or from the place of work

a) Travel from home to work is not worktime except when employee receives an emergency call outside his regular
working hours and is required to travel to his regular place of business or some other worksite→working time
b) Travel that is all in a day’s work – time spent by an employee in travel as part of his principal activity→hours
worked
c) Travel away from home – travel that keeps an employee away from home overnight →worktime when it cuts
across the employee’s workday
  Prepared by: Denni G. Borres

LECTURES, MEETINGS & TRAINING PROGRAMS

Attendance at lectures, meetings, training programs, and similar activities need not be counted as working time if the
following three criteria are met:
1. Attendance is outside of the employee’s regular working hours;
2. Attendance is in fact voluntary; and
3. The employee does not perform any productive work during such attendance.

GRIEVANCE MEETING
Time spent in adjusting grievance between employer and employees during the time the employees are required by the
employer to be on the premises is considered hours worked. But in the event a bona fide union is involved, the counting of
such time will, as a matter of enforcement policy, be left to the process of collective bargaining or to the custom or practice
under the collective bargaining agreement.

SEMESTRAL BREAK
▪ Regular full-time monthly paid teachers in private schools are entitled to salary and emergency cost-of-living
allowance during semestral breaks.

HOURS WORKED: EVIDENCE AND DOUBTS

General Rule: When an employer alleges that his employee works less than the normal hours of employment as provided for in law,
he bears the burden of proving his allegation with clear & satisfactory evidence.

MEAL PERIODS [ART. 85]

➔ must be at least 60 minutes time-off for regular meals

General Rule: Meal period is not compensable.

Exceptions:

1. where the lunch period or mealtime is predominantly spent for the employer’s benefit (considered overtime) ;or

2. where it is less than 60 minutes (but not less than 20 minutes) must be with full pay when:

a. where work is non-manual (does not involve strenuous physical exertion);

b. where the establishment regularly operates not less than 16hrs a day
c. in cases of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss w/c the ER would otherwise suffer;
d. where the work is necessary to prevent serious loss of perishable goods

If less than 20 minutes, it becomes only a rest period and is thus considered work time.
Note: Meal periods during overtime work is not given to workers performing OT because OT is usually for a short
period.

*Employees may request for their mealtime to be shortened so they can leave work earlier → not compensable.

Requisites:
a. Employees voluntarily agree in writing and waive their OT pay;
b. No diminution in the salary and other fringe benefits of the employees already existing;
c. Work is not physically strenuous, and they are provided with adequate coffee breaks in the morning &
afternoon;
d. Value of benefits is equal to the compensation due them;
e. OT pay will become due and demandable if they are permitted/made to work beyond 4:30 pm; and
f. The arrangement is of temporary duration.

Note: The 8-hour work period does not include the meal break. Employees may leave the company premises as long as
they return to their posts on time.
  Prepared by: Denni G. Borres

NIGHT SHIFT DIFFERENTIAL [ART. 86]

- Employee must be paid at least 10% of his regular wage for each hour of work performed between 10PM and 6AM;

- given as premium for working at a time for sleep & rest;

- in addition to the exceptions in Art 82, night shift differential is not applicable to employees of retail and service
establishments regularly employing 5 employees and below;

- if work done from 10pm-6am is OT work, then the 10% night shift differential should be based on the OT rate.

- not waivable (founded on public policy)

- the receipt of OT pay will not preclude payment of night shift differential;

- burden of proof of payment of night shift differential rests on the employer.

OVERTIME WORK [ART. 87]

Overtime Pay – additional compensation for work performed beyond 8 hours within the worker’s 24-hr workday regardless whether
the work covers 2 calendar days

Basis –> cash wage only without any deduction.

1. OT on a regular work day at least 25% thereof

2. OT on a holiday or rest day at least 30% thereof
* CBA may stipulate higher OT pay rate.

Paid unworked days of a monthly-paid employee

Employer may stipulate that employee’s monthly salary constitutes payment for all the days of the month incl rest days &
holidays if when converted into its daily equivalent would still meet minimum wage → legal

How “work day” is counted

A day → the 24-hr period which commences from the time the employee regularly starts to work.

a. Broken Hours of Work – the minimum normal working hours need not be continuous to constitute as the legal
working day of 8 hours as long as the 8 hours is within a work day;

b. Work in Different Shifts in a Work day – work in excess of 8hrs within a work day is considered as OT
regardless of whether this is performed in a work shift other than at which the employee regularly works

• Ex. Employee’s shift is 10pm-6am. He is asked to take a shift of another employee who is absent from 2pm-10pm
(his regular work day would be from 10pm-10pm) → the 2nd shift is considered OT because it is still within his work
day.

General Rule: An express instruction from the employer to the employee to render OT work is not required for the
employee to be entitled to OT pay. It is sufficient that the employee is permitted or suffered to work. Neither is an
express approval by a supervisor needed.

Exception: On rest days & holidays, written authority after office hours is required for the employee to be entitled to
compensation.

o A verbal instruction to render OT work prevails over a memorandum prohibiting such work.
o OT claim is not justified for days where no work was required and no work could be done (i.e.
brownout, machine repair, lack of rawmats)

Action to Recover Compensation:

➢ estoppel & laches cannot be invoked against employees because that would be contrary to the spirit of the 8-hr
Labor Law, under w/c the laborers cannot waive their right to extra compensation;
➢ OT pay in arrears retroacts to the date when services were actually rendered

General Rule: Waiver or quitclaim – Any stipulation in the contract that the laborer shall work beyond the regular 8 hrs
without additional compensation for the extra hours is contrary to law and, therefore, null and void.
  Prepared by: Denni G. Borres

WAIVER OF OVERTIME PAY:

General Rule: OT pay cannot be waived expressly or impliedly.

Exceptions:

1. When the waiver is made in consideration of benefits & privileges which may be more than what will accrue to them
in OT pay; and

2. Compressed Work Week (CWW)– the number of workdays is reduced but the number of work hours in a day is
increased to more than 8, but no OT pay may be claimed.

Requisites of a Valid Compressed Workweek:

a. The scheme is expressly and voluntarily supported by majority of the employees affected;

b. In firms using substances, or operating in conditions that are hazardous to health, a certification is needed from
an accredited safety org or the firm’s safety committee that work beyond 8hrs is w/in the limits/levels of exposure
set by DOLE’s occupational safety & health standards;

c. The DOLE Regional Office is notified.

Note: Employees may validly waive the right to overtime under a CWW program, provided he did so voluntarily, with full
understanding of what he was doing and in consideration for the quit claim is credible & reasonable.
Note: Employees promoted from rank-and-file to supervisory lose their OT pay and other benefits under Art 82-96.

OVERTIME PAY COMPUTATIONS

Regular Workdays Reg Basic Wage + 25% thereof

Legal or Regular Holidays Holiday Wage Rate (200%) + 30% thereof
Rest Days or Special Holidays Rest day/Special Holiday wage rate (130%) + 30% thereof
Scheduled Rest Day w/c is also a Special Holiday Rest day & special holiday wage rate (150%) + 30% thereof
Scheduled rest day w/c is also a legal or regular holiday Rest day & legal holiday wage rate (260%) + 30% thereof
Double Holiday Double holiday wage rate (400%) + 30% thereof
• Employee will receive 200% of his regular daily wage when both regular holidays fall on the same day and he
does not work (Law provides that he shall get his regular daily wage of each regular holiday)

• 100% of Araw ng Kagitingan, 100% Good Friday. If he works on that day, he gets 400%.

FLEXIBLE WORK ARRANGEMENTS:

➔ Alternative work arrangements or schedules other than the traditional or standard work hours, workdays or
workweek. Employers may adopt them after due consultation w/ employees, taking into account the adverse
consequence of the situation on the performance and financial condition of the company.

➔ Its effectivity and implementation shall be temporary.

➔ Should be threshed out by the employer and the employee.

➔ DOLE Regional Office must be notified prior to implementation.

➔ In addition to CWW, FWAs include:

1. Reduction of workdays – where normal workdays per week are reduced but should not last for more than 6
months;
2. Rotation of workers – where the employees are rotated/alternately provided work w/in the workweek;
3. Forced leave – employees are required to go on leave for several days or weeks, utilizing their leave credits if
there are any;
4. Broken-time schedule – the work schedule is not continuous but the number of hours w/in the day or week is not
reduced;
5. Flexi-holiday schedule – employees agree to avail themselves of the holidays at some other days, provided that
there is no diminution of existing benefits as a result of such arrangement.
  Prepared by: Denni G. Borres

UNDERTIME NOT OFFSET BY OVERTIME [ART. 88]

✓ Whether on the same day or any other day is prohibited by law.

✓ Permission given to the employee to go on leave on some other day of the week shall not exempt employer from paying
the additional compensation

o Reason: Employees hourly rate is not equivalent to OT rate.

o Proper method: Deduct the UT from the accrued leave, if any.

EMERGENCY OVERTIME WORK [ART. 89]

General Rule: Employees cannot render OT against their will.

Exceptions:

1. In times of war or any national or local emergency declared by Congress/Chief Executive;

2. To prevent loss or damage to life or property due to emergencies and force majeure;

3. When there is urgent work needed on machines & equipment;

4. When work is necessary to preserve perishable goods;

5. To prevent serious obstruction or prejudice to the business or operations of the employer; and

6. When it is necessary to avail of favorable weather or environmental conditions where performance or quality f work is
dependent thereon.

RIGHT TO WEEKLY REST DAY [ART. 91]

➔ Duration: at least 24 consecutive hours after every 6 consecutive normal work days
- all establishments & enterprises may operate or open for business on Sundays & holidays provided that the
employees are given the weekly rest day & the benefits provided under the law.

Who determines the rest day schedule?

The employer determines and schedules the weekly rest period subject to the ff:
a. CBA;
b. Rules & regulations issued by the Secretary of Labor; and
c. Employee’s preference based on religious grounds. (When such preference will prejudice the business of the
employer and no other remedial measures are available, the weekly rest day may be scheduled to meet the
employee’s choice for at least 2 days a month.

WHEN THE EMPLOYER MAY REQUIRE WORK ON A REST DAY [ART. 92]

General Rule: Employers may not require their employees to work on their rest days.

Exceptions:
1. In cases of urgent work to be performed on the machinery, equipment or installation;

2. To prevent loss or damage to perishable goods;

3. In case of actual/impending emergencies caused by force majeure to prevent loss of life and property, or imminent danger
to public safety;

4. Where the nature of work requires continuous operations and the stoppage of work may result in irreparable injury/loss to
the employer;

5. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be
expected to resort to other measures; and

6. Under the circumstances analogous to the foregoing as determined by the Secretary of Labor.
  Prepared by: Denni G. Borres

The failure to work during an When an employee volunteers

to work on his rest day under
employee’s rest day does not
other circumstances, he may
justify disciplinary sanction of
be allowed to do so, provided
outright dismissal, more so
he expresses such desire in
when justifiable grounds exist
writing and he is paid the
for the said failure.
additional compensation for
working on his rest day

COMPENSATION FOR REST DAY, SUNDAY OR HOLIDAY WORK [ART. 93]

▪ Premium Pay or Differential Compensation – additional compensation for work rendered by the employee on days when
normally he should not be working such as special holidays and weekly rest days.
Note: This article does not prohibit a CBA stipulation for higher benefits.

FORMULAS ON HOW TO COMPUTE WAGES DURING HOLIDAYS

1. For Regular Holidays:
a) During an employee’s regular work day:
▪ If unworked → 100%
▪ If worked → 200% for the first 8 hrs – if it exceeds 8 hrs, plus 30% of hourly rate for
the said day

b) During an employee’s rest day:

▪ If unworked → 100%
▪ If worked → plus 30% of 200% for the first 8 hrs

2. For declared SPECIAL DAYS such as Special Non-Working Days, Special Public Holidays, Special
National Holiday and nationwide special days:
▪ If unworked - no pay, unless there is a favorable company policy, practice or CBA
granting payment of wages on special days even if unworked;
▪ If worked → plus 30% of the daily rate of 100% for the first 8 hrs – if it exceeds 8 hrs,
plus 30% of hourly rate for the said day
▪ If it falls on the rest day, and the employee worked:
o 1st 8hrs – plus 50% of the daily rate of 100%
o excess of 8hrs – plus 30% of hourly rate on said day

3. For those declared as Special Working Holiday:

➔ for work performed, an employee is entitled only to his basic rate.

RIGHT TO HOLIDAY PAY [ART. 94]

Holiday Pay → a day’s pay given by law to an employee even if he does not work on a regular holiday.

→ It is limited to the regular/legal holidays listed by law.

→ Employee should not have been absent w/o pay on the working day preceding the regular holiday.

In addition to the exceptions in Art. 82, holiday pay is not applicable to employees of retail and service
establishments regularly employing 10 workers or less.

Rule on Compensability – compensable whether worked or unworked subject to certain conditions.

• Legal holiday falling on a Sunday does not create an additional obligation for the employer to pay extra, aside from
the usual holiday pay to its monthly paid employees.
• Teaching Personnel paid per lecture/hr are not entitled to payment of holiday pay since they are paid by the hours
worked; and “no class days” means no work for them. They are entitled to their regular hourly rate on days declared
as special holidays or when classes are called off or shortened on acct of typhoons, floods rallies, and the like.
  Prepared by: Denni G. Borres

Double Holiday Pay (Araw ng Kagitingan & Good Friday on the same day)
a) 200% of the basic wage
i. entitled even if said holiday is unworked
ii. to give employee only 100% would reduce the number of holidays under the law
b) 400% if he worked on two regular holidays falling on the same day;
c) 520% if he worked on two regular holidays falling on the same day and at the same time falling on a scheduled
rest day

Successive Regular Holidays: To be entitled to 2 successive holidays, the employee must:

1. be present on the day immediately preceding the first holiday; or
2. be on leave with pay.
➢ Otherwise, he must work on the first holiday to be entitled to holiday pay on the second regular holiday.

RIGHT TO SERVICE INCENTIVE LEAVE (SIL) [ART. 95]

5 days leave with pay for every employee who has rendered at least one year of service.
➔ 1 year of service – service within 12 months, whether continuous or broken, reckoned from the
date the employee started working including authorized absences and paid regular holidays
unless the number of working days in the establishment as a matter of practice/policy is less
than 12 months.

SIL is not applicable to the ff:

1. Employees of the government;
2. Domestic helpers and persons in the personal service of another;
3. Managerial employees;
4. Field personnel whose performance is unsupervised or those who are paid a fixed amt for
performing work irrespective of the time consumed in the performance thereof
5. Those already enjoying the said benefits
6. Those already enjoying vacation leave w/ pay for at least 5 days;
7. Those employed in establishments regularly employing less than 10 employees.
Employees engaged on task/contract basis or paid purely commission basis are not
automatically exempted from the SIL unless they fall under the classification of field personnel.

➔ Unused service incentive leaves are required to be converted to cash at the end of the year or
upon termination of employment due to just causes or separation from the service due to
authorized causes. Basis of conversion: salary rate at the date of commutation.
➔ SIL replenishes yearly.
➔ Above article may be superseded by any stipulation favorable to the employee via an
employment contract, company policies, collective bargaining agreement, or analogous thereto.
Employees with salaries above minimum wage: the difference between the minimum wage and the actual salary
received by the employees cannot be deemed as their 13th month pay and SIL pay.

VACATION & SICK LEAVE

→ not statutorily required but is a matter of management discretion or CBA;
▪ General Rule: Benefits are non-cumulative and non-commutative; must be enjoyed by the employee
within 1 year, otherwise it is forfeited.
▪ Exception: when the labor law contract or the established practice of the employer provides otherwise.
  Prepared by: Denni G. Borres

SERVICE INCENTIVE LEAVE VACATION / SICK LEAVE

- Mandatory under Art. 95 of the Labor Code - Voluntary Grant (employer policy or CBA)

- Intended to alleviate the economic condition of - Intended to afford a laborer a chance to get a
the workers for it acts as replacement for much-needed rest to replenish his energy
regular income that would not be earned and renew his efficiency
during such instance

- Cannot be waived - Must be demanded in its opportune time;

silence is waiver

- Commutable - Not commutable

PARENTAL LEAVE (SOLO PARENTS)

→ Republic Act 8972;
→ 7 working days of leave credits with FULL pay;
→ given to an employee who has rendered at least 1 year of service;
→ not convertible to cash as the objective is for the solo parent employee to perform parental duties and
responsibilities where physical presence is required

BATTERED WOMAN LEAVE

→ female employee who is a victim of violence is entitled to a paid leave of 10 days in addition to other paid
leaves;
→ extendible when necessary
→ employee has to submit certification from the punong brgy, kagawad, prosecutor or clerk of court than an
action under RA 9262 has been filed and is pending.

SERVICE CHARGES [ART. 96]

All service charges collected by hotels, restaurants, and similar establishments shall be distributed as follows:
1) 85% for all covered employees to be equally distributed among them;
2) 15% for disposition by mgt to answer for losses and breakages and distribution to employees
receiving more than P2k/month at the discretion of the management in the latter case.

Coverage: only to hotels, restaurants, and businesses

similar thereto

All employees are covered, regardless of their position,

designation, employment status, irrespective of the method by
which their wages are paid, except managerial employees

Distributed to paid employees at least once

every 2 weeks or 2x a month at interval of at least
16 days.

▪ RULE IN CASE OF ABOLITION:

✓ in case the service charge is abolished, the share
of the covered employees shall be considered
integrated in their wages;
✓ the basis of the amount to be integrated shall be the
average share of each employee for the past 12
months immediately preceding the abolition.
  Prepared by: Denni G. Borres

POOLED TIPS

where an establishment does not collect service charges

but has a practice/policy of pooling tips given voluntarily
by its customers, the pooled tips should be monitored,
accounted for and distributed in the same manner as the
service charges

WAGES [ART. 97]

➔ paid to any employee; shall mean the renumeration or earnings, however

designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written/unwritten contract of employment for work done or to be done, or for
services rendered and includes the fair and reasonable value, as determined by
the Sec of Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee.

➢ Includes commissions – the recompense compensation/reward of an agent,

salesman, executor, trustee, receiver, factor, broker or bailee, when the
same is calculated as a percentage on the amt of his transactions or on the
profit of the principal.
→ Even if commissions were in the form of incentives or encouragement,
still these commissions are direct renumerations for services rendered w/c
contributed to the increase of income of the employer. The nature of work
of a salesman & the reason for such type of renumeration for services
rendered demonstrate that commissions are part of their wage or salary.
(Some salesmen do not receive any basic salary but depend on
commissions & allowances or commissions alone, although an employee-
employer relationship exists).

➢ Includes facilities or commodities – fair & reasonable value of board, lodging,

or other facilities customarily furnished by the employer to the employee

WAGES SALARY

Compensation for manual labor, Denotes a higher degree of

skilled/unskilled, paid at stated times, employment, or a superior grade of
and measured by the day, week, services, and implies a position or
month, or season. office

Indicates considerable pay for a lower Suggestive of a larger and more

and less responsible character of permanent or fixed compensation for
employment more important service

Has a less extensive meaning than Compensation of clerks, officers of

salary; being ordinarily restricted to pub corps, and pub offices
sums paid as hire or reward to
domestic or menial servants and to
sums paid to artisans, mechanics,
laborers, and other employees of like
class.

In many situations, however, and as the Supreme Court states, they are in
essence synonymous.

GRATUITY → given freely or without recompense; a gift; something voluntarily given in return for a favor or services;
a bounty; a tip.
  Prepared by: Denni G. Borres

➢ Gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given
to the workers whose purpose is “to reward employees who have rendered satisfactory & efficient
service to the company.”
➢ Not mandatory.

A FAIR DAY'S WAGE FOR A FAIR DAY'S WORK EQUAL PAY FOR EQUAL WORK

If there is no work performed by the employee, there can be no Employees working in the PH, if they are performing similar
wage or pay unless the laborer was able, willing and ready to functions & responsibilities under similar working conditions,
work but was prevented by the mgt or was illegally locked out, should be paid under this principle.
suspended or dismissed.

MINIMUM WAGES [ART. 99]

The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region
of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards.

STATUTORY MINIMUM WAGE

➔ the lowest wage rate fixed by law that an employer can pay his workers. Compensation w/c is less
than such minimum rate is considered an underpayment that violates the law.

➔ determined for each region by the regional wage boards

➔ provided w/ margin to take care of contingencies, such as increase of prices of commodities and
increase in wants and to provide means for a desirable improvement in employee’s mode of living (A
person’s needs increase as his means increase.)

EFFECTS OF ADOPTING A STATUTORY MINIMUM WAGE:

1. benefits all wage earners by setting a floor below w/c their pay cannot fall
2. raises the standard of competition among employers, since it would protect the fair-minded employer
from the competition of the employer who pays his workers a wage below subsistence;
3. a prerequisite to the adoption of the SSS, which requires contributions from employees themselves

ABILITY TO PAY IS IMMATERIAL

➔ Employer cannot exempt himself from liability to pay minimum wages because of poor
financial condition of the company

➔ Lack of funds is not a valid defense because the payment of minimum wage is a mandatory
statutory obligation

*Employees are not estopped to sue for difference in amount of wages*

- the acceptance by an employee of the wages paid him without objection
does not give rise to estoppel precluding him from suing for the difference
bet the amt received and the amt he should have received pursuant to a
valid minimum wage law

EXEMPTIONS TO THE COVERAGE OF THE RULE ON MINIMUM WAGES

1. Household or domestic helpers, including family drivers and persons in the personal service of
another;
2. Homeworkers engaged in needle-work;
  Prepared by: Denni G. Borres

3. Workers employed in any establishment duly registered with the National Cottage Industries and
Development Authority in accordance w/ RA 3470 provided that such workers perform the work
in their respective homes;
4. Workers in any duly registered cooperative when so recommended by the Bureau of Cooperative
Development and upon approval by the Sec of DOLE, provided however, that such
recommendation shall be given only for the purpose of making the cooperative viable and upon
finding and certification of said Bureau supported by adequate proof, that the cooperative cannot
resort to other remedial measures w/o serious loss or prejudice to its operation except through its
exemption from the requirements of the Rules. The exemption shall be subject to such terms &
conditions and for such period of time as the Sec of Labor may prescribe.
5. Barangay Micro Business Enterprises (BMBE) (under RA 9178/BMBE Law), provided that all
employees covered under this Act shall be entitled to the same benefits given to any regular
employee such as social security and health care benefits. BMBEs are also exempt from income
tax.

a. BMBE – any business entity or enterprise engaged in the production, processing or

manufacturing of products or commodities, including agro-processing, trading and services,
whose total assets including those arising from loans but exclusive of the land on w/c the
particular business entity’s office, plant and equipment are situated, shall not be more than
P3M. (comprises no less than 90% of Phil. employers)

6. Retail Service Establishments (by virtue of RA 6727/Wage Rationalization Act)

a.
regularly employing not more than 10 workers; and
b.
upon application with and as determined by the Regional Board in
accordance with the Rules & Regulations of the Commission.
➢ If not granted, employer shall receive the appropriate
compensation due them + 1% interest per month retroactive to
the effectivity of the Act. Burden of proving such exemption rests
on the employer.
7. Other exemptions by provisions of Wage Orders by the Regional Tripartite Wage & Productivity
Board

FORMS OF PAYMENT [ART. 102]

- Proof of payment of wages – Employer has the burden of proof.

- Employers are required to keep a payroll. Among other things, it must show the length of time to be
paid, the pay rate, the amount actually paid, and so on, and the employee should sign the payroll.

Employer cannot pay his workers by means of:

1) Promissory notes
2) Vouchers
3) Coupons
4) Tokens
5) Tickets
6) Chits
7) Any object other than legal tender
Even when expressly requested by the employee

General Rule → payment by legal tender

Exceptions → payment by check or money order may be allowed if the same is:
1. Customary on the date of effectivity of the labor code;
2. Necessary because of special circs as determined by the Sec of Labor;
3. Stipulated in the collective bargaining agreement; or
4. Where the ff conditions are met:
a. There is a bank or other facility for encashment w/in 1km radius;
b. The employer, or any of his agents or reps, does not receive any pecuniary
benefit directly/indirectly from the arrangement;
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c. The employees are given reasonable time during banking hours to withdraw their
wages from the bank w/c time shall be considered as compensable hours worked
if done during working hours; and
d. The payment by check is with the written consent of the employees concerned if
there is no CBA authorizing the payment of wages by bank checks.

TIME OF PAYMENT [ART. 103]

General Rule:
1. At least once every 2 weeks; or
2. Twice a month at intervals not exceeding 16 days.

Exceptions

1. In case of force majeure or other circumstances beyond the employer’s control, payment must
be made immediately after such occurrence has ceased.
2. If engaged to perform a task w/c cannot be completed in 2 weeks and in the absence of CBA
or arbitration award:
i. Payment shall be made at intervals not exceeding 16 days, in proportion to the
amount of work completed;
ii. That final settlement is made upon completion of work.

13th MONTH PAY [P.D. 851]

✓ Presidential Decree 851 is the legal basis for the 13th month pay.
✓ Equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a
calendar year;
✓ 13th month pay is computed pro-rata for employees who have worked for only a portion of
the year.
✓ Granted to rank-and-file employees who have worked for at least 1 month during a
calendar year;

Exceptions:
1. Managerial employees (those vested with the powers or prerogative to
execute management policies and/or to hire, transfer, suspend, layoff, recall,
discharge, assign, or discipline employees or to effectively recommend such
actions) are exempted.
2. Employees who are paid on task basis are excluded from the coverage of the
13th MP.
3. The government and any of its political subdivisions, including government-
owned corps are exempted.
4. Persons in the personal service of another in relation to such workers are not
covered.
5. Employers who are already paying their employees 13th MP or more in a
calendar year or its equivalent at the time of the issuance of PD 851.
shall include Xmas bonus, mid-year bonus, profit-sharing
payments and other cash bonuses amounting to not less than 1/12
of the basic salary. When an employer pays less than 1/12 of the
employee’s basic salary, the employer shall pay the difference.

The absence of an express provision in the CBA/employment contract obligating the

employer to pay 13th month pay is immaterial.

COMPUTATION:
13TH MONTH PAY = ANNUAL BASIC SALARY ÷ 12

Basic salary shall include all renumerations or earnings paid by an employer to an employee for services rendered

Not included in the computation: (fringe benefits)

▪ COLAs granted pursuant to PD 525/LOI 174,
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▪ profit-sharing payments and all allowances and

monetary benefits which are not considered or integrated as part of the regular or basic salary of the
employee
▪ OT Pay

Fringe benefits – all allowances & monetary benefits w/c are not considered/integrated as part of the basic
salary

WHEN SHOULD THE 13th MP BE GIVEN?

It should be paid not later than December 24 of every year. It may be given in halves: first half to
be paid before the opening of the regular school year and then the remaining on or before December
24.

Reminders:
- an employee who has resigned or was dismissed at any time
before the time for payment of the 13th MP is entitled to this
monetary benefit in proportion to the length of time he worked
during the year, unless otherwise stipulated in the CBA;
- a distressed employer is exempted from paying 13thMP
upon prior authorization from the Secretary of DOLE;
- 13th MP is not included as regular wage for purposes of
determining OT and premium payment, fringe benefits,
contributions to the State Insurance Fund, SSS, PHIC and
private retirement plans;
- 13th month pay and other benefits that DO NOT EXCEED
NINETY THOUSAND PESOS (Php90,000.00) ARE EXEMPT
FROM TAX.
- difference of opinion in the computation of 13th MP is a
nonstrikeable issue, a strike held on this ground is illegal.